A Primer on CDFIs for Foundation and Nonprofit Leaders
Recently, The Center for Nonprofit Governance (CNG) within the Raj & Kamla Gupta Governance Institute at LeBow College of Business at Drexel University invited Pam Porter, CEO of Stepping Stone Partners, LLC and former OFN executive to demystify CDFIs for leaders at nonprofit organizations seeking access to capital and for foundations seeking impact investments.
Porter summarizes the power of community development finance: “CDFIs are vital partners for both nonprofit and endowment leaders. CDFIs make loans that banks are not typically able or willing to make, provide technical assistance to the borrowers to help them succeed and repay their loan, and then relend the money into the community. This creates a virtuous circle of opportunity and multiplier effect of community development.”
She goes on to explain how CDFIs work, what kind of social impact can result from investing in a CDFI, and how a CDFI can align with investment objectives such as leverage and diversification and risk mitigation.
Porter concludes her case for CDFIs with a powerful summary: “By investing in a CDFI, a foundation gets a triple win: social impact aligned with its mission and values; financial return with leverage, diversification, and risk mitigation; and finally, operational efficiency to invest in complicated situations.”
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